THOMAS, WILSON, RAGUSA, UFTTMAN & CO.app1.lla.state.la.us/PublicReports.nsf/76F1D9C1A8BF37E3862571CB… · THOMAS, WILSON, RAGUSA, UFFMAN & COr CERTIFIED PUBLIC ACCOUNTANTS INDEPENDENT

EAST SIDE FIRE PROTECTION DISTRICT NO. 5CITY OF BATON ROUGE

PARISH OF EAST BATON ROUGE, LOUISIANA

COMPONENT UNIT FINANCIAL STATEMENTSAND INDEPENDENT AUDITORS' REPORTS

For the Year Ended December 31,2005

Release DateJ*^^ &

THOMAS, WILSON, RAGUSA, UFTTMAN & CO.

CERTIFIED PUBLIC ACCOUNTANTSBATON ROUGE, LOUISIANA

T A B L E O F C O N T E N T S

INDEPENDENT AUDITORS* REPORT 1

MANAGEMENT'S DISCUSSION AND ANALYSIS 2-6

GOVERNMENT-WIDE FINANCIAL STATEMENTSSTATEMENT OF NET ASSETS, DECEMBER 31,2005 EXHIBIT A 7

STATEMENT OF ACTIVITIES, YEAR ENDEDDECEMBER 31, 2005 EXHIBIT B 8

FUND FINANCIAL STATEMENTSBALANCE SHEET - GOVERNMENTAL FUNDS,

DECEMBER 31,2005 EXHIBIT C 9

STATEMENT OF REVENUES, EXPENDITURES, ANDCHANGES IN FUND BALANCE - GOVERNMENTALFUNDS ACTUAL AND BUDGET (NON-GAAP BASIS),YEARENDED DECEMBER31,2005 EXHIBIT D 10

RECONCILIATION OF THE STATEMENT OFGOVERNMENTAL FUND BALANCE SHEET TO THEGOVERNMENT-WIDE STATEMENT OF NET ASSETS,DECEMBER 31,2005 EXHIBITS 11

RECONCILIATION OF THE STATEMENT OF REVENUES,EXPENDITURES AND CHANGES IN FUND BALANCEOF GOVERNMENTAL FUNDS TO THE GOVERNMENT-WIDE STATEMENT OF ACTIVITIES, YEAR ENDEDDECEMBER 31,2005 EXHIBIT F 12

NOTES TO FINANCIAL STATEMENTS. DECEMBER 31 f 2005 13-19

INDEPENDENT AUDITORS' REPORT ON COMPLIANCE AND ONINTERNAL CONTROL OVER FINANCIAL REPORTING BASEDON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED INACCORDANCE WITH GOVERNMENT AUDITING STANDARDS 20

THOMAS, WILSON, RAGUSA, UFFMAN & CO.

THOMAS, WILSON, RAGUSA, UFFMAN & COrCERTIFIED PUBLIC ACCOUNTANTS

INDEPENDENT AUDITORS' REPORT

Board of CommissionersEast Side Fire Protection District No. 5Baton Rouge, Louisiana

We have audited the accompanying financial statements of East Side Fire Protection District No. 5, acomponent unit of the City of Baton Rouge, as of December 31, 2005, and for the year then ended, aslisted in the table of contents. These component unit financial statements are the responsibility of EastSide Fire Protection District No. 5. Our responsibility is to express an opinion on these component unitfinancial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica. Those standards require that we plan and perform the audit to obtain reasonable assurance aboutwhether the component unit financial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures in the component unitfinancial statements. An audit also includes assessing the accounting principles used and significantestimates made by management, as well as evaluating the overall component unit financial statementpresentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the component unit financial statements referred to above present fairly, in all materialrespects, the financial position of East Side Fire Protection District No. 5, as of December 31, 2005, andthe changes in financial position thereof for the year then ended in conformity with accounting principlesgenerally accepted in the United States of America.

The management's discussion and analysis on pages 2 through 5 is not a required part of the basicfinancial statements but is supplementary information required by accounting principles generallyaccepted in the United States of America. We have applied certain limited procedures, which consistedprincipally of inquiries of management regarding the methods of measurement and presentation of therequired supplementary information. However, we did not audit the information and express no opinionon it

In accordance with Government Auditing Standards, we have also issued a reported dated March 19,2006, on our consideration of East Side Fire Protection District No. 5's internal control over financialreporting and on our test of its compliance with certain provisions of laws, regulations, contracts andgrants.

Certified Public AccountantsMarch 19, 2006

527 EAST AIRPORT AVENUE BATON ROUGE, LOUISIANA 70806 225-926-1050 EMAIL:[email protected]

Page 2MANAGEMENT'S DISCUSSION AND ANALYSIS

Within this section of the East Side Fire Protection District No. 5 *s annual financial report, the District'smanagement provides narrative discussion and analysis of the financial activities of the district for thefiscal year ended December 31,2005. The District's financial performance is discussed and analyzedwithin the context of the accompanying financial statements and disclosure following this section.Additional information is available in the transmittal letter which precedes Management's Discussion andAnalysis.

Financial Highlights• The District's assets exceeded its liabilities by $2,847,843 (net assets) for the fiscal year reported.

This compares to the previous year as restated when assets exceeded liabilities by $2,163,613.

• Total net assets are comprised of the following:

1. Capital assets, net of related debt, of $ 1,773,904 include property and equipment, net ofaccumulated depreciation, and reduced for outstanding debt related to the purchase orconstruction of capital assets.

2. Unrestricted net assets of $1,073,939 represent the portion available to maintain the District'scontinuing obligations to citizens and creditors.

• The District's governmental funds reported total ending fund balance of $ 1,131,985 this year.This compares to the prior year ending fund balance of $680,743 showing an increase of$451,242 during the current year.

•' At the end of the current year, unreserved fund balance for the District was 1,073,939, or 111% oftotal District expenditures including transfers and 67% of total District revenues.

• Total liabilities of the District decreased by $187,434 to $554,325 during the fiscal year.

Overview of the Financial Statements

Management's Discussion and Analysis introduces the District's basic financial statements. The basicfinancial statements include: (1) government-wide financial statements, (2) fund financial statements, and(3) notes to the financial statements. The District also includes in this report additional information tosupplement the basic financial statements.

Government-Wide Financial Statements

The District's annual report includes two government-wide financial statements. These statementsprovide both long-term and short-term information about the District's overall status. Financial reportingat this level uses a perspective similar to that found in the private sector with its basis in full accrualaccounting and elimination or rectification of internal activities.

The first of these government-wide statements is the Statement of Net Assets. This is the District'sstatement of position presenting information that includes all of the District's assets and liabilities, withthe difference reported as net assets. Over time, increases or decreases in net assets may serve as a usefulindicator of whether the financial position of the District as a whole is improving or deteriorating.Evaluation of the overall economic health of the District would extend to other non-financial factors suchas diversification of the taxpayer base in addition to the financial information provided in this report.


Page3

The second government-wide statement is the Statement of Activities which reports how the District's netassets changed during the current fiscal year. All current year revenues and expenses are includedregardless of when cash is received or paid. An important purpose of the design of the statement ofactivities is to show the financial reliance of the District's activities and functions on revenues providedby the District's taxpayers.

Fund Financial Statements

A fund is an accountability unit used to maintain control over resources segregated for specific activitiesor objectives.

Governmental funds are reported hi the fund financial statements and encompass essentially the samefunctions reported as governmental activities in the government-wide financial statements. However, thefocus is very different with fund statements providing a distinctive view of the District's governmentalfunds. These statements report short-term fiscal accountability focusing on the use of spendable resourcesduring the year and balances of spendable resources available at the end of the year. They are useful inevaluating annual financing requirements of governmental programs and the commitment of spendableresources for the near-term.

Since the government-wide focus includes the long-term view, comparisons between these twoperspectives may provide insight into the long-term financing decisions. Both the governmental fundbalance sheet and the governmental fund statement of revenues, expenditures, and changes in fundbalances provides a reconciliation to the government-wide statements to assist in understanding thedifferences between these two perspectives.

Budgetary comparison statements are included in the basic financial statements for the District. Thesestatements and schedules demonstrate compliance with the District's adopted budget

Notes to the financial statements

The accompanying notes to the financial statements provide information essential to a full understandingof the government-wide and fund financial statements. The notes to the financial statements beginimmediately following the basic financial statements.

Financial Analysis of the District as a Whole

As year-to-year financial information is accumulated on a consistent basis, changes in net assets may beobserved and used to discuss the changing financial position of the District as a whole.

The District's net assets at year-end are $2,847,846. This is an increase $684,230 over last year's restatednet assets of $2,163,613. The following table provides a summary of the District's net assets:

THOMAS, WILSON, RAGUSA, UFFMAN & CO.-

Summary of Net Assets (Government Wide)Page 4

2005Current and other assetsCapital assetsAccumulated depreciationTotal assets

Current liabilitiesLong-term liabilities

Total liabilities

Net assets:Invested in capital assets,

Net of related debtUnrestricted

Total net assets

$ 1,277,1013,236,251(1.11U84)3.402.168

171,956385.369554.325

1,773,9041.073.939

$ 2.847.843

(as restated)2004

$ 800,3273,074,614(969.569)

2.905.372

52,516689.243741.759

1,565,252598.361

$ 2.163.613

Amount_ Change$ 476,774

161,637,(141.615)

496.796

119,440(312.874)(187.434)

208,652475.578

$684230

Change59.575.25

(14.61)17.10

16.41(227.42)(28.61)

13.3379.4831.62

The District reported positive balances in net assets. The District's overall financial position improved duringfiscal year 2005.

Comparative data is accumulated and presented to assist analysis. The following table provides a summary ofthe District's changes in net assets:

Summary of Changes in Net Assets (Governmental Funds)

Revenues: 2005Ad valorem taxes $ 1,098,076Inter-governmental revenues 32,740Fire protection user charges 237,282Interest 13,670Miscellaneous 223,719Supplemental Pay - State of

LA Funded 7.200Total Revenues 1.602.687

Expenses:Public safety 780,047Debt service 209,760Capita] expenditures 161.636

Total Expenditures 1,151,443

Other Financing Sources:Bond Issue Proceeds 0Capital Lease Proceeds 0

(Decrease) Increase in net assets 451,244Beginning net assets 680.743

Ending net assets $ 1.131.987

2004695,81942,449225,0994,98836,357

7.2001.011.912

699,892228,731244.497

1,173,120

043.643

(117,565)798,308

AmountChange402,257(9,709)12,1838,682

187,362

Q590.775

80,155(18,971)(82.861)(21,677)

0(43.643)

568,809(117.565)

Change57.81(22.87)5.41

174.06515.34

0.0058.38

11.45(8.29)(33.89)(1-85)

0.00(100.00)

483.83(14.73)

66.29

THOMAS, WILSON, RAGUSA, UFFMAN & CO,

Genera] Fund Budgetary HighlightsPage5

The General Fund revised budget for fiscal year 2005 was approximately $1,190,844. This was an increase of$307,604 over the previous year budget. The General Fund budget complied with financial policies approvedby the District's Board of Commissioners.

Capital Asset and Debt Administration

Capital assetsThe District's investment in capital assets, net of accumulated depreciation, for governmental and business-typeactivities as of December 31,2005 and 2004, was $ 2,125,067 and $ 2,105,045, respectively. The total increasein this net investment was 0.95%.

Capital AssetsNet of Accumulated Depreciation

Totals2005

Non-Depreciable Assets:LandDeposits on Land

Depreciable Assets:BuildingsEquipmentEquipment under capital lease

Total

$ 151,36023,013

1,215,221684,38451.089

2004

$ 151,3600

1,245,972324,706383.007

AmountChange

023,013

(30,751)359,678

(331.918)

$ 2.125.067 S 2.105.045

Total %Change

0.00

(2.47)110.77(86.66)

0.95

Long-Term Debt

At the end of the year, the District had total bonded debt outstanding of $300,000. At the end of the year, theDistrict had total debt relating to capital leases of $51,163. Some equipment was moved from the classificationof under capital lease to regular equipment because during the year final lease payments were made and theequipment was purchased under the purchase option at the end of the lease term.

Economic Environment and Next Year's Budgets and Rates

The general outlook for the District's economy for the next year is for minimal growth with additional majorexpenditures as required by Property Insurance Association of Louisiana and Insurance Services Offices. Wewill have to acquire a new ladder truck and a new fire station before we are rated again. The cost of the aerialapparatus is about $700,000. It has been ordered but not yet received. The district has made a $200,000payment on the apparatus and financing has been secured. The cost of the new station will be between $1.1 and1.4 million. The land has been purchased but not paid for. Final payment of $295,000 is due February 1,2007.We are in the process of securing excess revenue bonds for this purchase. Hibernia Bank has agreed in principleto underwrite the bond issue but it has not yet been formalized. We will also need additional staffing. TheDistrict hopes to have the new station completed in the first quarter 2007 and the aerial apparatus will bedelivered in late September 2006.

On the revenue side, the District has increased its funding from the city parish from $32,000 to $70,000 startingin 2006. The District has also passed another millage that will generate about $350,000 per year in tax revenue.Overall, the budget will be tight for the next six to ten years, but the service area is continuing to develop andshould provide a steady tax base of support.

THOMAS, WILSON, RAGUSA, UFF3MAN & CO.

Page 6

Contacting the District's Financial Management

This financial report is designed to provide a general overview of the District's finances, comply with finance-related laws and regulations, and demonstrate the District's commitment to public accountability. If you havequestions about this report or would like to request additional information, contact the District's Chief S. DaleHancock, East Side Fire Protection District No. 5,15094 Old Hammond Highway, Baton Rouge, Louisiana70816.




STATEMENT OF NET ASSETSDecember 31,2005

Page?Exhibit A

CURRENT ASSETS:Cash and Cash EquivalentsProperty Taxes Receivable, Net of Uncollectible AllowanceDue From Other Governments

TOTAL CURRENT ASSETS

CAPITAL ASSETS:LandDeposit on New Station LandBuildingsEquipmentEquipment Under Capital LeasesAccumulated Depreciation

NET CAPITAL ASSETS

TOTAL ASSETS

98,395231,403947,303

U77,101

151,36023,013

1,522,4291,006,784532,665

(1,111,184)J,125,067

$ 3,402,168

LIABILITIES

CURRENT LIABILITIES:Accrued ExpensesCurrent Portion of Bonds PayableCurrent Portion of Obligation Under Capital Leases

TOTAL CURRENT LIABILITIES

LONG-TERM LIABILITIES:Obligations Under Capital Leases - net of current portionBonds Payable - net of current poritonCompensated Absences Payable

TOTAL LONG-TERM LIABILITIES

TOTAL LIABILITIES

NET ASSETS:Investment in Capital Assets, Net of Related DebtUnrestricted

TOTAL NET ASSETS

TOTAL LIABILITIES AND NET ASSETS

37,392100,00034,564

171,956

16,599200,000165,770382,369

554,325

1,773,9041,073,9392,847,843

$ 3,402,168

The accompanying notes are an integral part of these financial statements.




STATEMENT OF ACnVITIBSYear Ended December 31,2005

PageSExhibit B

FUNCTION/PROGRAM:Governmental Activities:

Public Safety

TOTAL GOVERNMENTAL ACTIVITIES

Expenses

$ 966,313

$ 966,313

ProgramRevenues

Charges forServices

$ 343,056

$ 343,056

NetRevenues

(Expenses)

$ (623,257)

$ (623,257)

General Revenues:Taxes:

Property $1,138,733Grants and Contributions not

Restricted to Specific Programs 32,740Grants Restricted to Specific Programs 77,678Proceeds from Sale of Equipment 4,000Reimbursement for Katrina Expenses 33,466State Supplemental Pay 7,200Investment Earnings 13,670

Total General Revenues and Transfers 1,307,487

Change in Net Assets 684,230

Net Assets - Beginning (as restated) 2,163,613

Net Assets - Ending $2,847,843


EAST SIDE FIRE PROTECTION DISTRICT NO. 5CTTY OF BATON ROUGE


BALANCE SHEET - GOVERNMENTAL FUNDSDecember 31,2005

Page 9Exhibit C

ASSETS:Cash and Cash EquivalentsAccounts Receivable (Net)Due From Other Governments

TOTAL ASSETS

LIABILITIES:Accrued Expenses and Benefits Payable

FUND BALANCE:Unrestricted

TOTAL LIABILITIES AND FUND BALANCE

$ 98,395123,679947,303

$1,169,377

$ 37^92

1,131,985

$1,169,377





STATEMENT OF REVENUES, EXPENDITURES, ANDCHANGES IN .FUND BALANCE OF GOVERNMENTAL FUNDS

ACTUAL AND BUDGET (NON-GAAP) BASISYear Ended December 31,2005

ActualREVENUES:

Ad Valorem TaxesInsurance RebatesFire Protection User ChargesIntergovernmental RevenuesInterest & Penalties - delinquent taxesInterestMiscellaneous Revenues

TOTAL REVENUES

EXPENDITURES:Current

Public SafetyDebt ServiceCapital Expenditures

TOTAL EXPENDITURES

$ 1,098,07642,538

225,21232,7402,070

13,670188,381

1,602,687

780,047209,760161,636

1,151,443

(Original)Budget

$ 760,00041,750

225,00032,7402,3004,400

10,000

1,076,190

775,950212,383

62,500

1,050,833

(Revised)Budget

$ 714,60242,538

215,00032,7402,300

12,395171,269

1,190,844

1,156,024


Page 10Exhibit D

VarianceFavorable

(Unfavorable)

$ 383,474

10.212

(230)1,275

17,112

411,843

(U,234)(2,623)9,276

(4>581)

Excess (Deficiency) of Revenues Over Expenditures S 451,244 $ 25,357 $ 34,820 $ 416,424

THOMAS, WILSON, RAGUSA, UFPMAN & CO.-



RECONCILIATION OF GOVERNMENTAL FUNDSBALANCE SHEET TO THE STATEMENT OF NET ASSETS

December 31,2005

Page 11Exhibits

Fund Balances - Total Governmental Funds

Amounts reported for governmental activities in the statementof net assets are different because:

Capital assets used in governmental activities are notfinancial resources and, therefore are not reported inthe governmental funds.

Governmental Capital FundsLess: Accumulated Depreciation

Some property tax. revenues were collected more thansixty days after year-end and therefore are not availablesoon enough to pay for current period expenditures.

Long-term liabilities, including bonds payable, are not dueand payable in the current period and therefore are notreported in the governmental funds.

Bonds PayableObligations Under Capital LeasesCompensated Absences

NET ASSETS OF GOVERNMENTAL ACTIVITIES

$ 1,131,985

$ 3,236,251(1,111,184)

(300,000)(51,163)

(165,770)

2,125,067

107,724

(516,933)





RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES,AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO

THE STATEMENT OF ACTIVITIESYear Ended December 3 3,2005

Page 12Exhibit F

Net Change in Fund Balance - Total Governmental Funds

Amounts reported for governmental activities in the statementof activities are different because:

Governmental funds report capital outlays as expenditures. However, inthe statement of activities, the cost of those assets are allocated overtheir estimated useful lives and reported as depreciation expense

Capital OutlayDepreciation Expense

Because some revenues will not be collected for several months afteryear-end, they are not considered "available" revenues in thegovernmental funds.

Because some revenues from prior year were not collected until after60 days into the current year, they were not consider available"revenues in governmental funds.

The issuance of long-term debt provides current financial resources togovernmental funds, while the repayment of the principal of long-termdebt consumes the current financial resources of governmental funds.Neither transaction, however, has any effect on the net assets.

Some expenses reported in the statement of activities, such ascompensated absences, do not require the use of current financialresources and, therefore, are not reported as expenditures ingovernmental fiinds.

CHANGE IN NET ASSETS OF GOVERNMENTAL ACTIVITIES

$ 451,242

$ 161,636(141,615) 20,021

107,724

(67,068)

188,631

(16,320)

$ 684,230



Page 13EAST SIDE FIRE PROTECTION DISTRICT NO. 5

CITY OF BATON ROUGEPARISH OF EAST BATON ROUGE, LOUISIANA

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Formation and Operations - East Side Fire Protection District No. 5 (the District) is a component unit of theCity of Baton Rouge, Parish of East Baton Rouge, Louisiana (the City-Parish). A five-member boardgoverns the District. The board members are appointed by the City-Parish Metropolitan Council and are notcompensated. Effective January 1,1994, the District became a separate operational unit actingindependently from the City-Parish, pursuant to an intergovernmental agreement between the City-Parishand the District.

The purpose of the District is to provide fire protection for the citizens of the District The District servesapproximately 5,000 households and other business establishments. The total estimated population served isapproximately 18,000. The District employs two permanent full-time employees and various otherpermanent and contract part-time employees. However, many of the District's services are still providedthrough volunteers.

Basis for Presentation - The accompanying financial statements of East Side Fire Protection District No. 5have been prepared in conformity with generally accepted accounting principles (GAAP) as applied togovernmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles.

Financial Reporting Entity - As the governing authority, for reporting purposes, the City-Parish is theprimary financial reporting entity. Governmental Accounting Standards Board Statement No. 14 establishedcriteria for determining which component units should be considered part of the City-Parish for financialreporting purposes. The basic criterion for including a potential component unit within the reporting entity isfinancial accountability. The GASB has set forth criteria to be considered in determining financialaccountability. Because the City-Parish Metropolitan Council appoints the District's governing body, and(1) has the ability to impose its will on the District, and, (2) the District has the potential to provide specificfinancial benefits to, or impose specific financial burdens on, the City-Parish, then, the District isdetermined to be a component unit of the City-Parish.

The accompanying financial statements present information only on the funds maintained by the Districtand do not present information on the City-Parish, the general government services provided by thatgovernmental unit, or the other governmental units that comprise the financial reporting entity.

Fund Accounting - The District uses funds and account groups to report on its financial position and theresults of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financialmanagement by segregating transactions relating to certain government functions or activities. The Generalfund is used to record all financial resources not required to be accounted for in other funds.

Government-Wide Accounting - In accordance with Governmental Accounting Standards Board Statement(GASB) No. 34, the District has presented a Statement of Net Assets anda Statement of Activities. Thesestatements include only the activities and assets of the District Government-wide accounting is designed toprovide a more comprehensive view of the government -unit's operations and financial position as a singleeconomic entity.




NOTES TO FINANCIAL STATEMENTS - 2Year Ended December 31,2005

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Government-Wide Accounting (continued) - Government-wide statements distinguish betweengovernmental-type and business-type activities. Governmental activities are those financed through taxes,intergovernmental revenues, and other non-exchange revenues and are usually reported in governmentalfunds. Business activities are financed in whole or part through fees charged for goods or services to thegeneral public and is usually reported in proprietary funds. The District only has governmental-typeactivities.

Basis of Accounting - The accounting and financial reporting treatment applied to a fund is determined byits measurement focus. The Governmental funds are accounted for using a current financial resourcesmeasurement focus. With this measurement focus, only current assets and current liabilities are generallyincluded on the balance sheet The operating statement presents increases and decreases in net currentassets.

The modified accrual basis of accounting is used by the Governmental Funds. Revenues are recognized inthe accounting period in which they become available and measurable. Property taxes are consideredmeasurable in the calendar year of the tax levy. User fees are considered measurable in the period they arecollected. Expenditures are recognized hi the accounting period in which the liability is incurred, ifmeasurable. Transfers between funds mat are not expected to be repaid are accounted for as other financingsources (uses). They are recorded at the time the transfer is made.

Policies specific to government-wide statements are as follows:

1. Inter-fund receivables and payables are eliminated in the Statement of Net Assets, except for theresidual amounts due between governmental and business type activities.

2. Reporting on governmental-type activities is based on Financial Accounting Standards Board (FASB)Statements and Interpretations issued after November 30,1989, except where they conflict or contradictGASB pronouncements.

3. Tangible and/or intangible assets used in operations with an estimated useful life that extends beyondone year are capitalized. Such assets are recorded at their historical costs and are depreciated using thestraight-line method of depreciation over their estimated useful lives.

4. The Statement of Activities presents two categories of program revenues - a) charges for services; andb) operating grants and contributions. Charges for services are those revenues arising from charges tocustomers who purchase, use, or directly benefit from goods and services provided by the DistrictGrants and contributions, whether operating or capital in nature, are revenues arising from receipts thatare restricted for a specific use.

Budget - The 2005 budget was prepared in 2004 by the Chief, and ratified by the Board of Commissioners.A public hearing was held in November 2004, and the budget became effective January 1,2005. The budgetwas revised during 2005 and a public hearing was held in December 2005 to ratify the revisions. Thebudget for the District is prepared on the cash basis. Revenues and receipts are budgeted in the year receiptis expected, and expenditures and disbursements are budgeted in the year that the purchases are made. Nobudget distinction is made between the capital projects and general funds. Further, for financial statementpresentation purposes, the governmental funds are combined and compared to the budget for variances.





NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Encumbrances - The District does not use an encumbrance system of accounting. The books are kept on thecash basis and the financial statements are prepared on the modified accrual basis of accounting.

Cash and Cash Equivalents - Cash includes amounts in demand deposits and interest-bearing demanddeposits. The District considers short-term (maturity of 90 days or less), highly liquid investments as cashequivalents. Under state law, the District may deposit funds in demand deposits, interest-bearing demanddeposits, or time deposits with state banks organized under Louisiana law and national banks having theirprincipal offices in Louisiana.

Fixed Assets and Depreciation - Fixed assets are recorded as expenditures at the time of purchase, and therelated assets are capitalized (reported) in the Statement of Net Assets. Fixed assets donated are recorded atthe estimated fair market value at the time the assets were donated.

In June 1999, GASB No. 34 was issued requiring the inclusion and depreciation of the District'sinfrastructure, retroactive to 1982 if applicable. Such assets have been depreciated using the straight-linemethod over their estimated useful lives from date of acquisition as follows:

ApproximateLife in Years

Buildings 50Equipment 5-10Vehicles 5-10Equipment under capital leases "life" of lease

The financial statement amounts for accumulated depreciation as of the year December 31, 2000 have beenrestated to reflect compliance with this GASB requirement.

Compensated Absences - The District's policy relating to sick leave includes recognizing sick leave at arate of .02 hours for every hour worked for permanent part-time employees. AU civil service employees getone year of paid sick leave. No cash payment may be made for accumulated sick leave upon termination orseparation of employment, therefore no accrual has been made for non-vesting sick pay. Part-timeemployees earn vacation time at a rate of .04 hours for every hour worked. Full-time employees earnvacation at a rate of twelve hours per month, which equates to eighteen days per year. Compensatedabsences payable represents the accrued vacation pay.

Lone-Term Obligations - Long-term obligations expected to be financed from governmental funds arereported in the Statement of Net Assets.

Net Assets/Fund Balance - In the Statement of Net Assets, the difference between a government's assetsand liabilities is recorded as net assets. The two components of net assets are as follows:

1 - Invested in Capital Assets. Net of Related Debt - records capital assets net of accumulateddepreciation and reduced by any outstanding balances of bonds or other borrowing (leaseobligations) attributable to the acquisition, construction, or improvement of capital assets.





NOTE 1; SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued^

Net Assets/Fund Balance (continued)

2. Unrestricted Net Assets - represent net assets not appropriable for expenditures or legallysegregated for a specific future use.

NOTE 2: CASH AND CASH EQUIVALENTS

At December 31,2005, the District had cash and cash equivalents (book balances) as follows:

Interest-bearing demand deposits $98.395

These deposits are stated at cost, which approximate market Under state law, these deposits (or the resultingbank balances) must be secured by federal deposit insurance or the pledge of securities owned by the fiscalagent bank. The market value of the pledged securities plus the federal deposit insurance must at all timesequal the amount on deposit with the fiscal agent These securities are held in the name of the pledgingfiscal agent bank in a holding or custodial bank that is mutually acceptable to both parties. At December 31,2005, the District had deposits (collected bank balances) secured from risk by $100,000 of federal depositinsurance and over $563,000 of pledged securities held by the custodial bank in the name of the fiscal agentbank (GASB Category 3).

Even though the pledged securities are considered uncollateralized (Category 3) under the provisions ofGASB Statement 3, Louisiana Revised Statute 39:1229 imposes a statutory requirement on the custodialbank to advertise and sell the pledged securities within 10 days of being notified by the District that thefiscal agent has failed to pay deposited funds upon demand.

NOTE 3: IN VESTMENTS

The District does not have any investments other than the cash deposits shown in the financial statementsunder cash and cash equivalents.

NOTE 4: PROPERTY TAXES

Property taxes are assessed and collected by the East Baton Rouge Assessor's Office and Sheriffs Office.The following is a summary of property taxes receivable at December 31,2005:

Property taxes receivable $ 254,775Less: allowance for uncollectible accounts (23.3721Net property taxes receivable £ 231.403

The allowance represents taxes not expected to be collected within the next year.

Included in due from other governments is $913,837 which represents property taxes collected by the EastBaton Rouge Assessor's office and Sheriffs office but not remitted to the District as of December 3i, 2005.

•THOMAS, WILSON, RAGUSA, UPFMAN & CO.




NOTE 5: CHANGES IN FIXED ASSETS

Following is a summary of the changes in fixed assets for the year December 31,2005:

BuildingsFurniture &. Equipment$ 2,923,254

0138.623

Land$ 151

23

,360

0.013

Less:AccumulatedDepreciation$ (969,569)

0(141.614)

Total. Net$ 2,105,045

020.022

Balance at 12/31/04

Disposals-2005Additions-2005

Balance at 12/31/05 S_3.06L877 £ 174.373 $(1.111.1831 S 2.128.067

NOTE 6: RETIREMENT PLAN AND NET PENSION OBLIGATION

The District's two full-time employees are eligible for participation in the Employees1 Retirement System ofthe East Baton Rouge City-Parish. The District's contributions for 2005 were 20.13% of the coveredemployees* wages. Required contributions for 2005 were $ 32,205. Contributions in the amount of $33,324were made on their behalf during 2005 and included $ 1,119 in payments for 2004 accrued contributions.

NOTE 7: COMPENSATED ABSENCES

At December 31,2005, employees of the District have accumulated and vested $ 107,462 of compensatedabsences, which were computed in accordance with GASB Codification Section C60.

NOTE 8: CHANGES IN LONG-TERM OBLIGATIONS

In November 2001, the District entered into a lease purchase for a new fire engine vehicle. The cost of theasset and enhancements was $99,500, to be repaid in 60 monthly installments of principal and interesttotaling $1,865. The imputed interest rate was calculated to be approximately 4.8%.

In December 2004, the District entered into a lease purchase for a new Ford Expedition. The cost of theasset and enhancements was $43,643, to be repaid in 3 annual installments of principal and interest totaling$15,324. The imputed interest rate was calculated to be approximately 4.37%,

In 2004, the District issued five long-term certificates of indebtedness to a local bank in the aggregateamount of $450,000, payable over a five year period at various stated rates ranging from 2.3% to 4%, tomake improvements to facilities, purchased equipment and refinanced old bonds payable for the District'sfire protection purposes. The certificate is secured by and payable solely from a pledge and dedication of theexcess of annual revenues of the District above statutory, necessary, and usual charges in each of the fiscalyears during which the certificate is outstanding.





Page 18

NOTE 8: CHANGES IN LONG-TERM OBLIGATIONS (Continued)

The following is a summary of the long-term obligation transactions and balances during the yean

Compensated Capital BondAbsences Leases Debt Totals

Balance at J.2/3 1/04 $ 102,475

- Additions 4,987Deductions/repayments 0

Balance at 12/3 1/05 $ 107,̂ 2

$ 139,793 $ 400,000

0 0(88.630V dOO.000)

$ 51.163 S 300.000

The annual principal payments on long-term obligations outstanding at December 31, 2005,

Bond Issue Two LeaseYearEndintt S450M Obligations

200620072008

During 2005, interest expense paid totaled $23,292.

NOTE 9: RELATED PARTY TRANSACTIONS

$ 100,000 $ 35,839100,000 15,324100.000 0

$ 300.000 $ 51.163

$ 642,268

4,987C188.630}

$ 458^25

are as follows:

Total$ 135,839

115,324100.000

S 3S1.J63

There were no transactions with related parties during the year ended December 31,2005.

NOTE 10: VALUE OF CONTRIBUTED SERVICES

The District relies heavily on the contributed services of volunteer firefighters and support staff. During2005, there were responses to approximately 1,458 fires, emergency medical services (EMS), and othermiscellaneous calls. Volunteer hours for training, firefighting, and administrative duties totaledapproximately 16,100 at an estimated value of approximately $202,300, which is not included in theaccompanying financial statements.

THOMAS, WILSON, RAGUSA, UFPMAN & CO.



NOTES TO FINANCIAL STATEMENTS - 7Year Ended December 31, 2005

NOTE 11; CONTINGENCIES

Under current Civil Service regulations, each full-time employee is technically allowed one year ofcompensated sick pay in the event of a long-term illness or injury not due to gross negligence or willfulintent to harm themselves. Under this policy, the District could be liable for additional compensatedabsences for its two civil service classified employees hi the total amount of $ 120,411. However, no cashpayment may be made for unused sick pay upon termination or separation of employment.

NOTE 12: SUPPLEMENTAL PAY

The statement of activities reflects income and program expenses of $7,200 for supplemental pay from theState of Louisiana paid directly to the covered employees.

NOTE 13: DEFERRED COMPENSATION PL AN

During 2005, the District adopted a deferred compensation plan created in accordance with Section 457 ofthe Internal Revenue Code of 1986. The assets of the plan are held hi trust as described in IRC Section457(g) for the exclusive benefit of participants and their beneficiaries. The custodian thereof tor theexclusive benefit of the participants holds the custodial account for the beneficiaries of this plan, and theassets may not be diverted to any other use. The administrators are agents of the employer for purposes ofproviding direction to the custodian of the custodial account from time to time for the investment of thefunds held in the account, transfer of assets to or from the account, and all other matters. In accordance withprovisions of GASB Statement No. 32, plan balances and activities are not reflected in the District'sfinancial statements.

NOTE 14: RISK MANAGEMENT

The District is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets;errors and omissions and natural disasters, workers1 compensation for which the District carries commercialinsurance. There have been no significant reduction in coverage from the prior year and settlements havenot exceeded coverage in the past three years.

NOTE 15: SUBSEQUENT EVENT

In April 2006, the District finalized the purchase of 2.68 acres of land for construction of the new fire house.The land was acquired for $315,000 plus closing costs of $3,013. The purchase contract includes use of a03 acre servitude for construction of a driveway. The District has paid a deposit on this land of $23,013with payment of $295,000 due on February 1,2007. The District has received approval of financing for thisproject from the bond commission contingent on an appraisal of the property supporting the sales price. TheDistrict feels confident that the appraisal will support the acquisition cost.

NOTE 16: PRIOR PERIOD ADJUSTMENT

Unrestricted net assets at December 31,2004 for total governmental activities reporting have been restatedto correct an error for the under-accrual of vested sick leave for full-time employees. The correctionincreased long-term liabilities and decreased unrestricted net assets by $46,975. This correction had noeffect on the government funds reporting for the year ended December 31,2004.

THOMAS, WILSON, RAGUSA, UFFMAN & CO.-

THOMAS, WILSON, RAGUSA, UFFMAN & COrCERTIFIED PUBLIC ACCOUNTANTS

INDEPENDENT AUDITORS' REPORT ON COMPLIANCEAND ON INTERNAL CONTROL OVER FINANCIAL REPORTING

BASED ON AN AUDIT OF FINANCIAL STATEMENTSPERFORMED IN ACCORDANCE WITHGOVERNMENT AUDITING STANDARDS

Board of CommissionersEast Side Fire Protection District No. 5Baton Rouge, Louisiana

We have audited the component unit financial statements of East Side Fire Protection District No, 5 as of andfor the year ended December 3 1 , 2005, and have issued our report thereon dated March 19, 2006. We conductedour audit in accordance with generally accepted auditing standards and the standards applicable to financialaudits contained in Government Auditing Standards, issued by the Comptroller General of the United States andthe provisions of Office of Management and Budget Circular A-128, "Audits of State and Local Governments".

ComplianceAs part of obtaining reasonable assurance about whether East Side Fire Protection District No. 5's financialstatements are free of material misstatement, we performed tests of its compliance with certain provisions oflaws and regulations, noncompliance with which could have a direct and material effect on the determination offinancial statement amounts. However, providing an opinion on compliance with those provisions was not anobjective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed noinstances of noncompliance that are required to be reported under Government Auditing Standards.

Internal Control Over Financial ReportingIn planning and performing our audit, we considered East Side Fire Protection District No. 5's internal controlover financial reporting in order to determine our auditing procedures for the purpose of expressing our opinionon the financial statements and not to provide assurance on the internal control over financial reporting. Ourconsideration of the internal control over financial reporting would not necessarily disclose all matters hi theinternal control over financial reporting mat might be material weaknesses. A material weakness is a conditionin which the design or operation of one or more of the internal control components does not reduce to arelatively low level the risk that misstatements in amounts that would be material in relation to the financialstatements being audited may occur and not be detected within a timely period by employees in the normalcourse of performing their assigned functions, We noted no matters involving the internal control over financialreporting and its operation that we consider to be material weaknesses.

This report is intended solely for the use of management, the City-Parish of East Baton Rouge, and theLegislative Auditor of the State of Louisiana and is not intended to be used, nor should be used, by anyone otherthan the specified parties.

awCertified Public AccountantsMarch 19, 2006

527 EAST AIRPORT AVENUE BATON ROUGE, LOUISIANA 70806 225-920-1050 EM AIL: [email protected]

Documents

THOMAS, WILSON, RAGUSA, UFTTMAN & CO.app1.lla.state.la.us/PublicReports.nsf/76F1D9C1A8BF37E3862571CB… · THOMAS, WILSON, RAGUSA, UFFMAN & COr CERTIFIED PUBLIC ACCOUNTANTS INDEPENDENT